Who Benefits From Sony-Wanda Partnership?

Rothman - Wong - Split - H - 2016
Kevin Winter/Getty Images for AFI; VCG via Getty Images

The marketing pact will fill gaps of the Chinese giant's film empire and give it an edge to possibly beat Disney in the theme park business.

When news broke Sept. 23 that Sony Pictures Entertainment had forged a major marketing partnership with Dalian Wanda Group, the upside for Sony and its film chairman Tom Rothman was clear.

Wanda, led by China's richest man, Wang Jianlin, would leverage its massive infrastructure — including Asia's largest cinema chain, hundreds of prime commercial real estate plazas, a growing theme park business and a leading mobile movie ticketing service — to promote the U.S. studio's titles in the world's second-largest theatrical market. What was less obvious were the benefits for Wanda, given Sony's recent shaky box-office performance. But analysts suggest the deal will allow the Chinese giant to fill gaps in its film empire at home.

The pact allows Wanda to invest in only the Sony films it believes will land a release in China. "Any percentages will be title-specific and limited to a select few," says a Sony source close to the deal. The relationship is understood to be open-ended and not capped to a set number of titles.

"This could be decent terms for Wanda because Sony is in a crappy cycle with a number of their films underperforming," says another insider. "If I'm doing a co-finance deal with one of the big six studios, I'd want to come in at a time when they've had a pretty poor performance because there are peaks and valleys. It's not like Sony is going to underperform forever."

Many also speculate about how the Sony relationship could help Wanda with one of its core ambitions: beating Disney in the theme park business. On Sept. 24, the company opened Hefei Wanda City, the second of 15 China theme parks Wang has promised to build by 2020. Each park costs from $3 billion to $8 billion; the minority investments in Sony titles are peanuts by comparison. Disney's strengths in the sector — 92 years' worth of beloved intellectual property — are newcomer Wanda's weaknesses. "Wanda is going to need IP properties for the parks," says Akin Gump partner Christopher Spicer, who helped Joe and Anthony Russo package their recent film fund in China.

Licensing its properties to Wanda also would serve Sony's ultimate aim of gaining more exposure in the growing Chinese market. Adds Spicer, "The theme park is a place where you can sell your IP that someone else is going to spend time developing." 

This story first appeared in the Oct. 14 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.